Tampa Bay Water received outstanding credit ratings for 2015. Fitch and Standard & Poor’s (S&P) confirmed the agency’s rating of AA+, and Moody’s upgraded the agency’s rating to Aa1.
“The ratings create a secure opportunity for investors,” said Christina Sackett, Tampa Bay Water’s Chief Financial Officer. “Great ratings from all three agencies motivate investors to purchase our bonds.”
The strong ratings of Tampa Bay Water’s six member governments were significant factors in the decision to confirm and upgrade the agency’s bond ratings. Tampa Bay Water’s higher ratings generate higher demand in the market, giving Tampa Bay Water the ability to issue bonds at lower interest rates.
“It gives us the opportunity to potentially save rate payers millions in interest expenses over time,” said Sackett.
Tampa Bay Water issues debt in the form of bonds to build and maintain the pipelines, pump stations and water treatment plants that make up the Tampa Bay region’s water supply system. Tampa Bay Water’s excellent ratings are supported by:
Customers and the Economy
Tampa Bay Water serves 2.3 million residents and businesses through three cities and three counties in the Tampa Bay region, which is the “economic anchor” for Florida’s Gulf Coast. During the appraisal, rating agencies considered the surrounding area and its economic state. Of the six member governments that make up Tampa Bay Water’s customers, almost all have investment grades at or above AA and Aa2.
Tampa Bay Water’s investment grades reflect a recovering regional economy. The Tampa Bay region experienced stable revenue and employment gains as the unemployment rate fell to 5.5 percent in December 2014, the lowest since the 2007-2009 recession.
Flexible Supply System and Sustainability
Tampa Bay Water’s water supply system is made up of three sources that produce clean, safe water to millions of Tampa Bay area residents and businesses. This system blends surface water, desalinated seawater and groundwater, which enables the agency to balance cost and environmental sustainability while delivering reliable drinking water 24-7.
Essential Service and Reliable Revenue
Tampa Bay Water is the region’s exclusive wholesale drinking water provider, and payments from the agency’s customers are a priority each month.
All six member governments are required to pay Tampa Bay Water ahead of their own respective debts as part of the Master Water Supply Contract – one of the agency’s governing documents. This guaranteed payment establishes Tampa Bay Water’s reliable revenue.
Strong Management and Financial Control
Tampa Bay Water’s management team is responsible for preparing a more than $100 million annual budget, 84 percent of which is fixed cost and guaranteed as part of the Master Water Supply Contract. Tampa Bay Water is also recognized for the agency’s exemplary amount of liquid cash-on-hand.
Tampa Bay Water’s ratings indicate a positive outlook for the Tampa Bay region.
The Rating Agencies
To determine investment grades, rating agencies consider several factors, including a business’s historical financial performance, the current economy’s cycle and economic trends. Interested parties can use the published assessment to decide a business’s credit risk, loan rates and long-term value.
